s. o. damocles

Government lays out fraud case against Big Tobacco
Justice: Companies collaborated on 'scheme to defraud'
From Tom Watkins
CNN

WASHINGTON (CNN) -- The Department of Justice laid out its $280 billion
racketeering case against Big Tobacco on Tuesday, claiming the industry
orchestrated a half-century scheme to defraud the American public.

"This case is all about fraud that continues to this day, designed to deceive
the public," government lawyer Frank Marine said.

"The defendants believed that their economic survival depended on their scheme
to defraud," he told U.S. District Court Judge Gladys Kessler, who will decide
the case.

The industry's impact on the nation's public health is staggering, he said,
citing studies that said cigarettes are responsible for one in five deaths in
the United States -- nearly 500,000 per year.

Scientists began to learn about the health effects of cigarettes in the 1940s,
when studies first showed a strong link between smoking and lung cancer, Marine
said.

In December 1953, several tobacco companies and a public relations firm met at
the Plaza Hotel in New York City, where the industry chiefs hatched their
scheme, Marine said. The executives talked about how to keep news about health
effects from causing their customers to quit and their bottom lines to shrink,
he said.

One upshot from the meetings was the publication by the companies in January
1954 in 454 newspapers across the country of a "Frank Statement" that said the
industry considered its customers' well-being to be "paramount" and included a
vow to research the link between smoking and disease.

The advertisement added, "We believe that the products we make are not injurious
to health."

To that, Marine said, "Well, these statements are lies."

During the 1953 meetings, the industry also agreed to form the Tobacco Institute
Research Committee to study the health impact of smoking and the Tobacco
Institute to disseminate information about the industry's products.

Marine dismissed the former as a group that attempted solely to create the false
impression that there was a dispute among scientists as to whether cigarettes
caused harm. He ridiculed the latter group as a "P.R. boot camp" intended to
spread misinformation about the impact of tobacco.

As evidence of conspiracy, Marine cited one Tobacco Institute document that said
the industry titans should work together.

"What affects one affects all," it said. "A united industry is our most potent
P.R. tool."

It was that collaboration that turned into an "overarching scheme to defraud,"
said Sharon Eubanks, lead attorney for the government, who along with Marine
delivered the five-hour statement.

She said seven "pillars" made up the scheme:


a.. A campaign to deny that smoking and exposure to tobacco smoke cause
adverse health effects in order to sow "fake doubt" in the evidence, thereby
giving addicted smokers a reason to continue with the habit.

b.. Propagation through the tobacco groups of the "myth" that the industry was
researching its products.

c.. Denial that nicotine is addictive.

d.. Denial that cigarette makers manipulate nicotine levels to create and
sustain addiction among their customers.

e.. Marketing of "light" cigarettes as less hazardous, even though the
industry's own evidence shows they are not, in order to give worried smokers an
alternative to quitting.

f.. Marketing to children as a way of replacing smokers who quit or died.

g.. Suppression of evidence of smoking's danger by destroying some
incriminating documents and sending others to other countries.
Eubanks read aloud from industry memos -- which she called "the tip of the
iceberg." Some documents painted pictures of tobacco executives deeply concerned
about their industry's prospects in the face of mounting evidence about the
health effects of cigarettes.

Tuesday's evidence included videotapes. In one, tobacco company CEOs testified
to Congress in September 1994 that each man believed nicotine was not addictive.

Eubanks presented a Tobacco Institute memo that she said explained why the
industry had to hew to that line. "We can't defend continued smoking as free
choice if the person was addicted," the memo said.

Outside the courtroom, industry lawyers argued that Big Tobacco has changed in
the wake of a 1998 settlement. Cigarette makers agreed with 46 states to pay
$246 billion over 25 years to reimburse Medicaid for what it spent treating
smoking-related diseases.

Philip Morris attorney William Ohlemeyer said companies have acknowledged that
nicotine can be addictive and is linked to disease.

And the government is required by law to show the fraud is ongoing -- which it
cannot, he said.

The issue of sales to children goes to the heart of the case, and Marine said
he would show documents indicating the industry researched behavior of children
as young as 11.

Marine cited a 1973 memo from the makers of the Kool and Lucky Strike brands
that said Brown & Williamson's growth would come from smokers ages 16-25, and a
1978 memo from the makers of Newport, Lorillard, that said, "The base of our
business is the high school student."

He rejected the industry contention that it does not want children to smoke
and that the $11.2 billion it spent last year on marketing was intended solely
to try to persuade adult smokers to switch brands.

Marine said the award sought by the government represented ill-gotten gains --
the money that the industry made from smokers who picked up the habit as
children from 1971 -- when the Racketeer Influenced and Corrupt Organizations
Act was passed -- until 2000.

The government also wants the industry to fund youth antismoking campaigns and
quit-smoking programs, he said.

The industry makes its opening statement Wednesday. The trial is expected to
last six months.

The defendants include Altria Group Inc.; Philip Morris USA Inc.; R.J.
Reynolds Tobacco Co.; Brown & Williamson Tobacco Corp. (which has merged with
R.J. Reynolds); British American Tobacco (Investments) Ltd. (as the former
parent company of Brown & Williamson); Lorillard Tobacco Co.; the Liggett Group
Inc.; the Council for Tobacco Research-U.S.A. Inc.; and the Tobacco Institute.

ipad

The government did this?? Our government?? Wow, they like us! They really
like us!!

"Government is not reason; it is not eloquent; it is force. Like fire, it is
a dangerous servant and a fearful master."
- George Washington

jebediah springfield

The "case" is a fraud.

anon3c67

We know this one for a fact about smoking. But it will be very
interesting what comes out about secondhand smoke--what the
tobacco companies knew and when they knew it.

A tougher call about marketing them that way, but we know they knew
about compensatory smoking. And they did pump up the nicotine levels.

No question here.

This will be interesting . . . and probably very costly.

-------------------------

One wonders why the tobacco companies let this come to trial.
They settled in a hurry with the states. Letting their dirty
laundry hang out where the entire world can see it can't be a good
thing for the company's stockholders. I know they think they
are confident they will win but this can't be good publicity
for them. They're hated enough already.

robert broughton

"That's three 'asswipes' in a single sentence." - "Jebediah Springfield",
Sept. 21, 2004

--
Bob Broughton
http://broughton.ca/
Vancouver, BC, Canada
"Watch your mouth, if you ever want to cross the border. Bad things
can happen to Canadians who use foul language in the US."
mailto:stanlee_98@yahoo.com , Nov. 30, 2003

marky

Goody! I hope it involves having a sporty car when smoking their brands...

I blew up my Porsche like that guy in the anti-smoking commercial...

jebediah springfield

Are you trying to say something, moron?

robert broughton

The message went right over your head, asswipe.

--
Bob Broughton
http://broughton.ca/
Vancouver, BC, Canada
"Watch your mouth, if you ever want to cross the border. Bad things
can happen to Canadians who use foul language in the US."
mailto:stanlee_98@yahoo.com , Nov. 30, 2003

jebediah springfield

What was the message, moron?